Wen reduces fiscal burden for exporters

By Cong Mu Source:Global Times Published: 2012-8-27 1:25:03

As leading economic indicators showed prolonged sluggishness, Premier Wen Jiabao proposed several measures to boost exports during his tour of Guangdong Province to investigate the export sector from Friday to Saturday.

"Economic downward pressure has been large since the beginning of the year. Affected by a weak international market, the growth of China's exports has slowed. Particularly after July, the major export provinces and cities in the coastal region witnessed significant slowdown in export growth rates," the Xinhua News Agency reported on Saturday.

The third quarter of the year will be critical for meeting exports targets for the year, but many uncertainties and difficulties are being predicted by leading indicators, such as falling new export orders, Xinhua quoted Wen as saying in Guangzhou, the provincial capital.

Wen proposed that the government speed up the export tax rebate process, expand export insurance coverage, reduce inspection fees, encourage financial institutions to improve their services on hedging against currency exchange risks, and keep attracting foreign investment.

New export orders were contracting at a faster rate in August, according to the HSBC Flash China manufacturing purchasing managers' index (PMI) report released on Thursday.

The flash China PMI dropped to a nine-month low of 47.8 points in August from 49.3 points in July, indicating continued weakness in the manufacturing sector in the country.

"Export weakness in July may have continued into August, which contributed to the decline of the HSBC PMI," Zhang Zhiwei, an economist at Japanese investment bank Nomura said in a research note on Thursday.

China's exports in July stood at $17.7 billion, up 1 percent year-on-year but 10.3 percentage points lower than in June, customs figures showed on Tuesday. This represented the largest percentage decline this year.

Shipbuilding, an industry closely tied to exports, was tossed about by the waves of global economic torpor. China Rongsheng Heavy Industries, the largest private shipbuilder in China, reported on Tuesday a net profit of 243.2 million yuan ($38.3 million) for the first six months of the year, marking an 81 percent drop year-on-year.

"In the first half of 2012, the global economic downturn and weak international trading activities continued to exert pressure on the shipping industry," the company said its first half financial report, noting that it received only two new ship orders in that period.

"The decline in exports was caused by a lackluster performance of the global economy. The prospects for the eurozone are bleak, as there has been no progress on a standardized eurozone debt or any other clear rescue measure … and the eurozone is China's largest trading partner," Yan Xiaona, a researcher at the Institute of Finance and Banking at the Chinese Academy of Social Sciences, told the Global Times on Sunday.

Manufacturing has also been battered by weak exports, because exports have a closer link to the real economy than investments, Yan said.

As export, investment and consumption are the three drivers of a country's economy, "it is good if two of the three drivers are running well, but now all three are under-performing," Chen Ying, chief economist of Zhangjiagang, Jiangsu-based Shagang Group, said on Sunday.

"We have also felt the impact of weak exports, but we can only adapt to the environment," said Chen, who expected this sluggishness would continue for years to come.

During his visit in Guangdong, Wen also suggested that trading and manufacturing companies should enhance their business management, upgrade technologies and carefully handle trade disputes, Xinhua reported.

Meanwhile, the State Administration of Taxation, the State Administration of Foreign Exchange (SAFE) and the General Administration of Customs together expanded a pilot foreign exchange management reform on commodity trade to nationwide on August 1, streamlining the procedures for companies to get export rebates, the SAFE said in a statement on its website on Friday.

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